Iceland Recovers from a Financial Crisis with Debt Writedowns

Rortybomb

In Iceland, rock-throwing brought criminal justice to the financial sector, wrote down debts healing balance-sheets and lead to a strong recovery out of a terrible economic situation. Omar R. Valdimarsson, who has been covering Iceland’s recovery for Bloomberg, has this great piece, Icelandic Anger Brings Debt Forgiveness in Best Recovery Story:

Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger.

Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association….

The island’s households were helped by an agreement between the government and the banks, which are still partly controlled by the state, to forgive debt exceeding…

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